2019 will be a year of potential contrasts for the M3/M27 property markets as investors and occupiers react to the unfolding Brexit scenario and as set against the robust activity within the region over the last twelve months.
A cautious and slow start to the year is expected but that could accelerate into an exciting second half.
Clearly the outlook is uncertain, but that has been the position since 2016 and to-date there has been little direct impact of the current political situation on the commercial property market in our region.
It is anticipated that the underlying market fundamentals and trends will continue unaffected during 2019. These include ongoing strong investor and occupier demand for industrial and warehousing space and in particular Grade A accommodation, and therefore schemes such as ITT/St. Modwen’s Junction 6 & 7 M3, 200,000 sq ft warehouse and business space development in Basingstoke. Secondly there is sustained confidence in the South Central region supporting long term investment and as illustrated by Tellon Capital’s redevelopment of the Bargate Quarter in Southampton and £60 million purchase and redevelopment of the Chineham Shopping Centre in Basingstoke and numerous substantial acquisitions over the last twelve months, including Eastleigh Works being sold for £20.6 million and Palmer Capital and RLAM acquiring out-of-town retail investments at Hedge End and Farnborough respectively for figures in the region of £40 million.
Further trends include increasing demand for flexible co-working and serviced office accommodation and an ongoing shortage of Grade A industrial and office space continuing to apply upward pressure to rental levels.
Total returns are likely to be driven by income rather than capital in 2019 as yields flatten, and depending on the Brexit outcome, potentially increasing from the historically low levels achieved last year. Investors and occupiers will probably take stock during the first quarter of 2019 but will soon be under pressure to allocate available funds and progress longer term investment plans.
In 2019 the industrial and warehouse sector will continue to be the “engine room” of the commercial property market in our region with occupier take-up likely to once more exceed 1,500,000 sq ft and a mixture of institutional, overseas and Local Authority investors continuing to actively seek opportunities in this sector. Short term storage will be at a premium. Rents will increase from the current levels of £11 per sq ft for Grade A space in the upper M3 corridor and from £9.50 per sq ft in Southampton.
The office market may be more subdued with rents remaining at headline figures in the region of £21 per sq ft in Southampton, £24 per sq ft in Basingstoke and £27 per sq ft in the Blackwater Valley.
The retail property sector in our region is facing another difficult year in terms of the performance and stability of the large retail chains and the ongoing background of fierce competition from online operations. Secondary and tertiary retail locations will continue to try to attract independent retailers mixed with food and beverage operators with a view to improving the vibrancy and economic dynamic of our High Streets. Rental levels in most of our Centres have been adjusted to the post-recession circumstances and there is unlikely to be any significant movement during 2019.
In summary, 2019 will be a year when the property market in the M3/M27 region will need to ride the uncertainty of the political backdrop, but with the confidence of a marketplace that has shown sustained growth and prosperity over the years and one that is well placed to take full advantage of any economic bounce-back once the Brexit course is known. In other words, for now, it is very much business as usual.
Acting on behalf of a private landlord London Clancy has sold the investment of 10 Ridgeway Parade, Church Crookham.
The premises comprising a total of 675 sq ft of ground floor retail/ancillary space let to a long established takeaway business as well as a first and second floor maisonette have been sold on a long leasehold basis.
The shop premises trading as Happy Fountain renewed for a term of 21 years, expiring 28th September 2034 with 3 year upwards only rent review patterns and without break options. The current passing rent is £16,100 per annum exclusive (including the current ground rent).
The quoting price was £240,000 for the freehold interest.
“We were delighted by the level of interest generated in this small lot and encouraged by the price achieved which clearly reflected the unbroken term remaining and 3 year review pattern,” reported Russell Ware of London Clancy.
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Acting on behalf of Basingstoke and Deane Borough Council, London Clancy has successfully let Unit 5 Bear Court, Basingstoke RG24 8QT.
The latest letting has seen local company Acrospire Products Ltd expand into the 2,000 sq ft mid-terrace unit.
The estate, which comprises 7 units continues to remain very popular among a variety of new and growing businesses.
Russell Ware of London Clancy commented, “we achieved the full quoting rent of £16,000 per annum, on the basis of a 5 year lease. Supply levels are still running at an all-time low, which are no doubt driving forward rents”.
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On behalf of a private client, London Clancy has sold a 0.66 acre site within Chawton Near Alton, known as Little Eastfield Holding.
The site has convenient access onto the A31 Winchester to Guildford road and the A339 Selborne Road.
The subject site comprises small industrial buildings on a unique parcel of land. The clients achieved a planning consent for demolition of the existing buildings and a new purpose built 5,000 sq ft B1 unit.
The guide price for the site was £350,000 and attracted interest from a range of parties, including owner occupiers and developers.
Russell Ware commented, “this represented a very rare opportunity to acquire a parcel of Freehold land which created a significant amount of interest from a range of different sectors. We were pleased to conclude the sale to a local firm of contractors, who intend to use the site for their own occupation”.
Angling Direct plc has signed a 10-year Lease of 1B Cathedral Hill Trading Estate, Guildford.
This will be their 26th branch acquisition, and the premises extend to about 5,500 ft2, plus mezzanine floor. The space has been completely refurbished by the landlord and fitted out by the tenants.
This latest deal continues Angling Direct’s UK-wide expansion and follows other recent acquisitions in Birmingham, Peterborough, Preston, Slough, Wigan and Wilmslow.
Angling Direct’s retained property advisor, Bastin Commercial, acted jointly in the acquisition with London Clancy’s Basingstoke office. Kingstons and Lambert Smith Hampton (Guildford) acted for the Landlord. CBRE also act for the Landlord as their Managing Agents.
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JIM LONDON FRICS